What Are the FAFSA Income Limits?

·4 min read

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It’s no secret that attending college is pretty pricey these days. If you’re preparing to go to college and you want to apply for financial aid, you may not be confident that you’ll qualify based on your family income. But regardless of your income level, there’s value in completing the FAFSA.

Keep reading to learn more about the FAFSA and the benefits of applying.

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What are the FAFSA income limits?

There are no specific FAFSA income limits or requirements that qualify or disqualify you for federal student aid. Even if your family is considered high-income earners, it’s important to complete the Free Application for Federal Student Aid each year to see what types of aid may be available to you.

Financial aid is complex, and multiple factors go into the financial aid calculation. In order to apply for federal student aid, students must complete the FAFSA. You can complete and submit the FAFSA for free, and it qualifies you for federal, state, and financial aid from the college you’re attending.

You’ll need to be aware of multiple FAFSA application deadlines: federal, state, and your college.

Federal

  • 2021–22 academic year: FAFSA form must be submitted by 11:59 p.m. Central time on June 30, 2022

  • 2022–23 academic year: FAFSA form must be submitted by 11:59 p.m. Central time on June 30, 2023

State

College

  • All colleges have their own unique deadlines. Your college’s financial aid office can inform you of your school’s deadline.

What are the different types of financial aid?

  • Grants — This form of financial aid doesn’t require repayment (some exceptions apply), and you can apply for many federal grants through FAFSA.

  • Scholarships — A scholarship is free money used to pay for school and can be awarded based on academic merit, talent, or for a particular area of study.

  • Work-study programs — The Federal Work-Study Program allows students to work part-time to earn money for school.

  • Loans — When you take out a student loan, you borrow money to pay for college. The loan will accumulate interest and you’ll repay it over a set period of time.

Need-based aid vs. merit-based aid

  • Need-based financial aid — Federal student aid is based on financial need. The income and assets of a student and their family are considered when determining need. Test scores, extracurricular activities, and athletic abilities aren’t taken into consideration.

  • Merit-based financial aid — Factors like athletic and academic achievement are considered when awarding merit-based financial aid, such as scholarships. Schools and outside sources can award merit-based financial aid.

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How is financial aid calculated?

Eligibility for federal financial aid is calculated based on a handful of factors:

  • The school’s cost of attendance, or COA

  • The student’s year in school

  • The student’s enrollment status (part-time or full-time)

  • The student’s Expected Family Contribution, or EFC, which is calculated by a standard federal formula: COA (cost of attendance) – EFC (expected family contribution) = Financial aid qualification

Types of income included in the FAFSA financial aid formula

  • Income earned by the student and parents

  • Available cash

  • Balances in savings and checking accounts

  • Investment portfolios

  • All real estate holdings (aside from the house you live in)

  • Business or farm assets

  • Untaxed income, such as child support

  • Interest income

  • Non-education veterans’ benefits

Types of income not included in the FAFSA financial aid formula

  • Extended foster care benefits

  • Student aid

  • Earned income credit

  • Child tax credit

  • Welfare payments

  • Untaxed Social Security benefits

  • Supplemental Security Income

  • Workforce Innovation and Opportunity Act educational benefits

  • On-base military housing or military housing allowance

  • Combat pay

  • Benefits from flexible spending arrangements, such as cafeteria plans

  • Foreign income exclusion

  • Credit for federal tax on special fuels

If you’ve exhausted your student aid options and need to take out private student loans, you can use Credible to compare student loan rates.

What to expect after you complete the FAFSA

You need to complete the FAFSA annually before you start each school year in order to apply for loans, work-study programs, and federal grants. After you submit your FAFSA application, you’ll receive a Student Aid Report, or SAR — this explains what aid the college is offering you (the types and amounts of aid) and what you should expect to spend on your education that year.

If you have yet to start college and have been accepted to multiple schools, you can submit FAFSA applications to each school you’re considering and then use those SAR reports to compare the costs of attending each college. Every Student Aid Report you receive will inform you of all sources of aid, such as scholarships, that you should expect to receive that year.

Once you’ve chosen a school to attend, that school’s financial aid office will apply your aid and then alert you of the remaining balance you must pay in order to attend. Don’t forget to complete the FAFSA each year, or you won’t be eligible to receive any aid.

About the author: Jacqueline DeMarco has been a personal finance writer for over seven years and is a contributor to Credible. She has contributed content to more than a dozen financial brands, including LendingTree, Credit Karma, Fundera, Chime, MagnifyMoney, Student Loan Hero, ValuePenguin, SoFi, and Northwestern Mutual.

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